A tight balance of bone formation and bone resorption (termed as the bone remodeling) maintains the homeostasis of the skeleton. The bone remodeling occurs by concerted action of bone forming osteoblasts and bone resorbing osteoclasts. These functionally opposing cells communicate via a paracrine cell signaling network. A shift in the balance in favor of multi-nucleated osteoclast formation causes bone destruction as observed in diseases such as autoimmune arthritis, periodontosis, postmenopausal osteoporosis, Padget's disease and bone tumor metastasis. On the other hand, an orderly supply of osteoblasts and osteoclasts are needed for maintaining the critical bone homeostasis. The bone morphogenetic proteins (BMPs) are used as therapeutic measures for promoting bone regeneration. Recent reports suggest that BMPs act on osteoclasts indirectly through osteoblasts or stromal cells. The precise mechanism by which BMP type 2 (BMP-2) regulates the osteoclast activity is the key question in this proposal. This will have therapeutic implications in designing drugs for the bone degenerating diseases common to the war veterans in the USA. Interaction of BMP with its cell surface receptors activates Smad signaling pathway. We have demonstrated a role for Smad signaling in BMP-2-induced osteoblastic expression of the colony stimulating factor-1 (CSF-1), a key regulator of osteoclastogenesis. Our preliminary experiments demonstrate an involvement of Smad signaling in BMP-2-induced expression of the critical osteoblastic transcription factor, osterix (Osx). Furthermore, in this proposal, we show for the first time that BMP-2 increases osteoblastic expression of another critical osteoclastogenic protein, the receptor activator of NF:B ligand (RANKL) and activates nuclear factor of activated T cells c1 (NFATc1), a master regulator of osteoclastogenesis. The hypothesis to be tested in this proposal is that BMP-2 activates the transcription factors osterix (Osx) and NFATc1 to control the expression of colony stimulating factor-1 (CSF-1) and RANKL in order to initiate the resorptive activity by osteoclasts. In the first specific aim, we will investigate the role of two key transcription factors, Osx and NFATc1 in regulating expression of the osteoclastogenic genes (RANKL and CSF-1) in osteoblasts in response to BMP-2. In the second specific aim, we will examine the mechanism underlying BMP-2-induced expression and activation of Osx and NFATc1 in osteoblasts. In the third specific aim, we will test the functional involvement of Osx and NFATc1 in BMP-2-induced osteoclastogenesis. We will test critical involvement of BMP-2 in activating these important transcription factors leading to osteoclast differentiation using immunoblotting, immunohistochemistry, in situ hybridization, ChIP analysis and qRTPCR techniques. In this proposal we will also explore the novel post-transcriptional regulation of Osx gene expression by BMP-2- induced microRNAs. Our results will demonstrate how BMP-2 can orchestrate a complex transcriptional network in osteoblasts to tightly regulate osteoclast activation. PUBLIC HEALTH RELEVANCE: Relevance of the proposed work to Veteran's Health: The disruption of bone remodeling homeostasis is an important determinant of bone related diseases in the veterans and the elderly populations. The most prevalent of these diseases is osteoporosis that gives rise to frequent bone fractures and extreme bone pain. More than 2 million American men suffer from osteoporosis brought about by abnormal osteoclast activity. 80,000 men have hip fractures every year of which one-third dies within a year. Increased understanding of the mechanisms involved in osteoclast formation and their activity will lead to rational approaches to manage bone loss. The objectives of this proposal are aimed at understanding the regulation of osteoclast activity. The results obtained from the experiments described in this proposal will elucidate the role of specific transcription factors, which regulate the osteoblast-mediated osteoclast differentiation and will help in developing drugs to regulate osteoclast activity in many bone diseases where destruction of bone is the main pathology.